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Adjudication: Can Stale Claims Proceed Or Are They Time-Barred?

Posted on Jan 05, 2015 by  | Tags: construction, adjudication, time bar, prescription, limitation, stale claims, dispute resolution  | 0 Comments

By Neil Morrison, Associate, Dispute Resolution

INTRODUCTION

The Housing Grants, Construction and Regeneration Act 1996 ("HGCR 96") created a statutory form of dispute resolution known for construction contracts known as 'adjudication'. The aim of the Act was to create a quick method of resolving disputes (within 28 days).

The process involves appointing an Adjudicator, followed by an exchange of written submissions between the opposing sides. Once the Adjudicator reaches a decision it is binding on the parties until resolved by Court proceedings, arbitration or agreement (i.e. both parties accept the adjudicator's decision).

REFERRAL TO ADJUDICATOR

In s.108(2)(a) of HGCR 96 it is stated:

"The contract shall...enable a party to give notice at any time of his intention to refer a dispute to adjudication." [Emphasis added]

If a notice can be given at any time then on the face of it that means stale Scottish claims can be referred to an adjudicator.

PRESCRIPTION

However the HGCR's referral of a dispute "at any time" sits uneasily with the Scottish doctrine of prescription which is set out in the Prescription and Limitation (Scotland) Act 1973.

If more than five years have passed since the claim arose then in Scotland it is extinguished (there are some exceptions to the general position). This begs the question can an extiguished claim be referred to an adjudicator? The answer would appear to be yes.

POINTLESS ADJUDICATION REFERRAL?

What would happen if a stale claim were to be referred to adjudication? The author agrees with the *author of an academic article on the issue that referring the dispute to an adjudicator would be pointless because an obligation to adjudicate (contained within contract) would be extinguished by prescription. Furthermore if the the contract contained no adjudication clause then the other party's underlying obligation to perform would also have been extinguished and any claim would be time-barred.

CONCLUSION

In light of the comments above, while a party could refer a stale Scottish dispute to an adjudicator, it would be a pointless exercise as the other party would undoubtedly argue the claim has been extinguished by prescription.

If the adjudicator held that it was not extinguished then one would ultimately expect a Court or an arbitrator to reach the view that the stale claim is time-barred with the consequence that the adjudicator's decision falls.

* S Wilson,"Prescription and Limitation of Actions in Scotland and England in Relation to Disputes in Construction Contracts" (2011) 15 Edinburgh Law Review 122-128.

If you have any queries arising from this article, please contact our Dispute Resolution team on 0131 226 8200.

Disclaimer: While every effort has been made to ensure the accuracy of this blog post, it is not intended to provide legal advice as individual situations will differ. No recipients of content in this blog post should act or refrain from acting on the basis of the blog post without seeking the appropriate legal advice on the particular facts and circumstances at issue from a qualified solicitor in their jurisdiction. The blog post is for general information only and is not legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. No solicitor-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with a solicitor qualified to practise in your jurisdiction.  Should you be interested in seeking our assistance with a legal matter, please contact the Dispute Resolution team on 0131 226 8200

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